Chaos in the Middle East continues to generate a geopolitical safe-haven bid in the Gold and Silver market, but there are signs that the precious metal’s bull run is losing momentum.

Gold prices have sky-rocketed to trade at a record high price of $2448.75 (Rs 73958) and Silver to $29.90 ( Rs 86093) amid heightened geopolitical tensions in the Middle East and speculative buying…

This week saw a significant bullish breakthrough in the price of silver, aided by gold’s record-breaking surge. Silver prices are surging and have reached a two-year high of $27.43 in the International market and a record-high level of Rs 81350 in domestic markets.

Central bank meetings and significant price volatility for precious metals characterized this week. Gold prices have corrected and retraced towards $2160 (~Rs 65600) after touching record highs. Strong support lies at $2150 (~Rs 65000), which is likely to act as a base. While Silver is back below $25 (~ 75000) after almost touching the high resistance area of $26 (~Rs 77000).

Even if the gold market is now taking a little breath, there is still a lot of fuel remaining in the tank if recent consolidation is any guide. While gold prices have reached all-time highs due to unprecedented speculative bullish bets, holdings in ETFs backed by gold are hovering around multi-year lows and this will keep supporting gold’s long-term upward trend.

The gold price has reached a new high above $2200 (~Rs 66000) due to rising estimates of Federal Reserve rate cuts in June and uncertain global growth prospects. The rally has been very sharp and like “Hand over Fist” which means “quickly or rapidly”.

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Gold prices closed around $2090, finally breaking out of the $2000 to $2060 range that had held for the past two months. The outbreak of a fresh banking crisis in the United States prompted safe-haven buying in gold.

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While the gold and silver markets ended the week with slight gains, they remain trapped in their weeks-long channel, with resistance above $2060 and $23.5, respectively, holding firm. For the next week, Gold is expected to continue its rangebound momentum from Rs 61000 to Rs 64000, while Silver is expected to trade in a range of Rs 70500 to Rs 73500.

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For the past few weeks, Gold has been acting like an alligator lying in the water, waiting for its prey. Gold is trading in a tight range as the Federal Reserve lays the basis for future rate decreases while pushing back on the start of the easing cycle. Markets now expect the Fed to lower interest rates in May.

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Precious Metals has been going through a tug-of-war for the past few days. On the negative side, there is the FED stance which has turned hawkish over the past two weeks. On the positive side, precious metals are getting safe-heaven bids from emerging geopolitical risks arising from the Middle East and banking stock selloff in the US.

Precious metals are still consolidating and are not out of the woods (out of the bearish zone) yet. Gold has been in a tight range within the Rs 61800 to Rs 62250 region this week, struggling to find enough buyers. After the FED Governor’s hawkish comments last week, markets are pricing lower chances of an FED rate cut in the March FED meeting.

Last week was rather quiet in terms of macro data, but central bankers delivered some hawkish signals ahead of the January rate decision. According to the FedWatch Tool provided by CME Group, the probability of the rate cuts decreased from more than 80% last week to a little over 46% this week.